SORA Sets Your Mortgage Rate Now

SORA — the Singapore Overnight Rate Average that the Monetary Authority of Singapore built to replace SIBOR and SOR — now anchors nearly every new home loan in the country. Buyers who understand how it moves will price their risk better than those still comparing marketing spreads (Monetary Authority of Singapore, 2026). The old benchmarks were quotes; SORA is a fact.

Key takeaways

• SORA is a transaction-based benchmark calculated from actual overnight interbank deals, not bank submissions, which is why it replaced the quote-based SIBOR and SOR (Monetary Authority of Singapore, 2026).
• Most home loans now reference three-month compounded SORA plus a bank spread, giving you a rate that is fixed for a quarter but re-priced from daily market data.
• Your borrowing limit is set by the 55% Total Debt Servicing Ratio ceiling, and that ceiling decides your loan quantum far more than the SORA level on the day you sign (99.co, 2026).
• The market has absorbed the rate reset without breaking: islandwide private prices stood at S$2,038 psf in 2026-Q2, only 6.8% below their S$2,186 psf peak but still 33.3% above the S$1,529 psf trough (URA caveat data, 2026).
• A single percentage-point rise on a S$375,000, 25-year amortising loan costs roughly S$174 a month — about S$52,000 in total interest over the term — so stress-test your budget at the rate you fear, not the rate you hope for.

The overnight number that replaced the old benchmarks

SORA is published every business day by MAS, and it answers one question: what did it actually cost a bank to borrow Singapore dollars overnight? The rate is a volume-weighted average of real unsecured overnight interbank transactions, which means it reflects where money genuinely changed hands rather than where institutions said they could borrow (Monetary Authority of Singapore, 2026).

That detail matters. The old benchmarks — the Singapore Interbank Offered Rate (SIBOR) and the Swap Offer Rate (SOR) — were constructed from bank quotes and derived instruments. They worked for decades, but the global crackdown on benchmark manipulation exposed the weakness in any rate built on trust rather than trades. LIBOR collapsed as a credible reference; SIBOR and SOR followed it into retirement, and MAS steered the market onto SORA through a phased transition that ended with the old fixings gone (Monetary Authority of Singapore, 2026).

Why SIBOR and SOR had to go

SIBOR was an interbank lending estimate. Banks would tell a panel what they believed they would pay to borrow, and that number flowed into mortgages, corporate loans, and derivatives. SOR took a different path: it was derived from foreign-exchange swap markets, which made it a proxy for what a bank would pay to fund Singapore dollars by borrowing US dollars and swapping back. Both were benchmarks built on judgement and arbitrage, not on a visible market.

Neither was inherently broken every day. But the entire point of a benchmark is that nobody should have to trust the people submitting it. SORA removes the guesswork. If you want to know what Singapore-dollar funding costs, you look at what overnight transactions actually cleared at. No submissions, no panels, no room for a friendly quote.

What SORA actually is

SORA is an overnight rate — it measures the cost of borrowing for a single day. That gives it two properties that a fifteen-year-old SIBOR loan never had.

First, it is transparent: every transaction that feeds the rate is a real trade in the domestic interbank cash market. Second, it is volatile. An overnight rate moves with daily liquidity conditions, which is why banks do not simply hand you "SORA" as your loan rate. They hand you compounded SORA — usually the three-month compounded version — which averages a quarter of daily rates into one stable number (Monetary Authority of Singapore, 2026).

How SORA reaches your monthly mortgage bill

Your mortgage lender is not lending you overnight money. It is lending you a mortgage with a 25-year life, and it prices that loan as a spread on top of a reference rate. In the SIBOR era, the reference moved slowly and predictably. In the SORA era, the reference is rebuilt daily from real trades, then compounded over a quarter to smooth the noise.

The three-month compounded SORA is now the industry standard for home loans. Here is the clever part: it is backward-looking. At the start of every three-month period, your bank knows the exact rate for the coming quarter because it is calculated from the realised overnight rates of the previous three months. You get three months of payment certainty, then a fresh reset. Your rate does not ping-pong with tomorrow's liquidity squeeze; it moves with a quarter of actual market data.

The reset rhythm and the spread

Practically, a SORA home loan reads something like "three-month compounded SORA plus 0.6%". The spread is where the bank's margin and your negotiation sit. The SORA component is the weather; the spread is your umbrella.

Quarterly resets mean your monthly repayment can change even when the central bank has not moved. Global funding pressure, US dollar conditions, and local liquidity all wash into SORA over time. A buyer who signs at the quoted rate and ignores the benchmark direction is buying weather insurance without looking at the sky.

The 55% ceiling that actually constrains you

The rate on your mortgage matters for cash flow, but your ability to get the loan in the first place is decided by the Total Debt Servicing Ratio. TDSR caps your total monthly debt obligations — the new mortgage, car loans, credit card debts, everything — at 55% of gross monthly income (99.co, 2026). It was tightened from 60% on 16 December 2021, and that one percentage-point rule change did more to cool buying power than any rate cycle.

The TDSR test is deliberately harsh. Banks must stress-check your ability to service the loan, and your variable income gets a haircut: only 70% of commission, bonus, and rental income counts toward what you can borrow (99.co, 2026). The system is telling you what your loan quantum should be; SORA tells you what servicing it will cost.

The numbers: what the SORA era has done to prices

Here is the surprise: a full rate reset has not crashed the market. The data shows a market that corrected, consolidated, and then refused to fall further.

Islandwide private prices sat at S$2,038 psf in 2026-Q2. That is 6.8% below the S$2,186 psf peak — a real drawdown, but hardly a rout — and 33.3% above the S$1,529 psf trough (URA caveat data, 2026). Buyers who were waiting for a crash are still waiting. Sellers who bought near the peak are underwater, but only modestly, and the current price level still sits a third above the last genuine bottom.

The new-sale premium is the real story

New launches carry a brutal premium. New-launch private homes averaged S$2,304 psf against S$1,595 psf for resale — a roughly 44% premium (PropAce Institutional Advisorydata, 2026). In a SORA world, that premium is not just a lifestyle choice; it is a loan quantum choice. Every S$100,000 extra borrowed carries rate risk, and the 44% premium means a new-launch buyer is borrowing substantially more to stand in the same city.

Geography still sets your price

The three rings of Singapore pricing remain distinct. Prime-core (CCR) homes have averaged S$2,444 psf, city-fringe (RCR) S$2,078 psf, and suburban (OCR) S$1,551 psf (PropAce Institutional Advisorydata, 2026). In SORA terms, the rate is the same for every buyer; the loan size is not. A CCR purchase at S$2,444 psf carries roughly 58% more debt per square foot than an OCR purchase at S$1,551 psf — and every basis point of SORA bites harder on a bigger principal.

HDB has flatlined at its peak

The HDB market tells a different story. Islandwide HDB prices of S$652 psf in 2026-Q2 sit exactly 0.0% above their prior S$652 psf peak — the market is at its ceiling — yet remain 57.5% above the S$414 psf trough (PropAce Institutional Advisorydata, 2026). For HDB flat owners, the rate cycle has not destroyed equity; it has simply stopped adding to it. For upgraders, the arithmetic is unforgiving: your flat may be worth more, but the private property you are buying has barely corrected.

What one point of SORA costs you: a per-buyer breakdown

Stop thinking in basis points and start thinking in dollars. Take the standard illustration used in Singapore's payment calculators: a S$500,000 home, a 75% loan, S$375,000 borrowed (99.co, 2026). On a 25-year amortising loan, moving from 1% to 2% adds roughly S$174 to your monthly repayment. Over the full 25 years, that single point costs about S$52,000 in extra interest.

Now put that in the TDSR frame. On S$5,000 of gross monthly income, the 55% TDSR ceiling is S$2,750 (99.co, 2026). A one-point SORA move on that S$375,000 loan consumes about S$174 of your S$2,750 headroom — roughly 6% of your entire debt-servicing capacity gone to nothing but a rate change. That is the difference between a comfortable buffer and a refinancing scramble.

Stack the upfront layers

The rate is only half the cost. Buy that S$500,000 property and the Buyer's Stamp Duty, at the tiered rates of 1% on the first S$180,000, 2% on the next S$180,000, and 3% on the remainder, comes to S$9,600 (99.co, 2026). Scale up: a S$1.5 million home attracts BSD of S$44,600, and a S$2 million home S$69,600. These are sunk costs before your first mortgage payment.

Then the Additional Buyer's Stamp Duty decides whether you can even play. A Singapore Citizen buying a second residential property faces ABSD of 20%; a third home costs 30%. A Permanent Resident pays 5% on the first home, 30% on the second, and 35% on the third. Foreigners face 60%, and entities 65% (99.co, 2026). A S$1.5 million second home for a citizen means S$300,000 of ABSD — before BSD, before the loan, before SORA moves against you.

The four-year trap

The 2025 cooling measures rewired the holding-period math. For properties acquired on or after 4 July 2025, Seller's Stamp Duty runs a four-year clock: 16% if you sell within a year, 12% in the second year, 8% in the third, and 4% in the fourth (99.co, 2026). Pair that with a SORA spike, and an early seller can be crushed by the stack: a falling price, a sinking loan, and a six-figure SSD bill. In a SORA world, holding period is not a lifestyle choice; it is a survival strategy.

The global backdrop SORA cannot ignore

SORA is a Singapore rate, but it does not move in a Singapore vacuum. The benchmark tracks where global funding costs are heading, and the era of near-zero rates is not returning soon. Yields across major markets have pressed to generational highs, central banks are still fighting inflation, and fiscal deficits are keeping term premiums elevated. SORA has absorbed that pressure in its own way: the compounding mechanism smooths the daily noise, but the trend carries through.

That changes behaviour. Buyers who stretched at 60% TDSR in the old regime have no room now. The market's 6.8% correction below the private peak is the price of the rate reset, and the 33.3% cushion above the trough is the evidence that owners would rather hold than sell at a loss (URA caveat data, 2026). Wage growth will carry some of the burden; rate relief will be slower than optimists hope.

Stress-testing your own mortgage

You do not need to predict SORA. You need to survive it. Run your numbers at a rate one or two points above what your bank is quoting, and make sure your TDSR still breathes at 55% (99.co, 2026). If your variable income includes commission or rental earnings, remember that only 70% of it counts toward your borrowing capacity — plan your loan quantum on the conservative number, not the good month (99.co, 2026).

How to compare SORA packages:

1. Spread: Compare the margin above SORA, but look at the all-in rate too, because the same spread can produce different payments depending on how the rate is compounded.
2. Reset frequency: Check how often the rate re-prices. Three-month compounded SORA resets quarterly, giving you more payment certainty than a faster-resetting package.
3. Fixed-rate comparator: Measure the SORA package against a fixed-rate package with the same tenure and lock-in period, not just against another floating rate.
4. Early-refinance penalty: Note the lock-in period and exit fees — they can wipe out a rate advantage if you need to move or switch.
5. Break-even savings after fees: Add up legal, valuation, cancellation, and processing costs, then calculate how many months of monthly savings it takes to recover them before a switch actually pays off.

Refinancing deserves its own scrutiny. Owner-occupiers refinancing their housing loan are exempt from TDSR only if the new loan quantum does not exceed the outstanding amount of the existing loan; any additional borrowing is still subject to TDSR (99.co, 2026). That exemption gives existing borrowers a genuine escape hatch if their current package resets badly, but it does not erase the rate; it only removes the paperwork ceiling. Refinance when the new package saves you meaningful dollars after fees, not because a bank's teaser rate looks friendly. And if you are near the peak of your affordability, remember the market's own resistance level: private prices remain 33.3% above the trough, but they are still 6.8% below the peak — do not assume appreciation will rescue a badly timed purchase (URA caveat data, 2026).

FAQ

What is SORA and why did it replace SIBOR?

SORA, the Singapore Overnight Rate Average, is a benchmark calculated by MAS from actual overnight interbank transactions, not from bank quotes. It replaced SIBOR and SOR because those older benchmarks were based on estimates and derived instruments, which made them vulnerable to manipulation. A transaction-based rate is harder to game and more honest as a reference for your home loan (Monetary Authority of Singapore, 2026).

Statutory Source: Monetary Authority of Singapore (MAS) — SORA Benchmark Framework & Compounded SORA

Will my SORA mortgage rate change every day?

No, and that is the point of compounded SORA. Most home loans use three-month compounded SORA, which averages a quarter of daily overnight rates into a single number. Your rate is set for the next three months at the start of each period, so your monthly repayment holds steady for the quarter even though the underlying benchmark is computed daily.

Statutory Source: Monetary Authority of Singapore (MAS) — SORA Benchmark Framework & Compounded SORA

What is the difference between SORA and the rate I see quoted by banks?

Banks quote your loan as a spread on top of the benchmark — for example, three-month compounded SORA plus a margin. The SORA component is the market-driven part; the spread is the bank's margin and your negotiable piece. You should compare spreads only after understanding where SORA itself is heading.

Statutory Source: Monetary Authority of Singapore (MAS) — SORA Benchmark Framework & Compounded SORA

Does SORA affect how much I can borrow under TDSR?

Indirectly. Your loan quantum is capped by the Total Debt Servicing Ratio, which limits monthly debt obligations to 55% of gross income regardless of today's SORA level (99.co, 2026). But a higher SORA raises your actual monthly repayment, which consumes more of your 55% headroom in real cash — so the benchmark shapes affordability even though it does not move the TDSR ceiling itself.

Statutory Source: Monetary Authority of Singapore (MAS) — SORA Benchmark Framework & Compounded SORA

Should I fix my rate or stay on a SORA-linked package?

That depends on your cash-flow buffer. SORA-linked packages give you quarterly resets and no penalty if rates fall, but they expose you to upward moves. A fixed-rate package buys certainty at a price — usually a higher starting rate. If your TDSR headroom is thin, certainty is worth the premium; if you can absorb a two-point shock, you can live with SORA's ups and downs.

Statutory Source: Inland Revenue Authority of Singapore (IRAS) — Late Payment or Non-Payment of Stamp Duty

By the numbers

``` Private PSF momentum by district — QoQ %

D11 +28.6% ██████████████████████████ D26 +12.0% ███████████ D25 +8.8% ████████ D12 +6.6% ██████ D08 +5.4% █████ D20 +4.0% ████ D28 +3.9% ████ D02 +0.2% █ D14 -0.5% ░ D22 -0.6% ░ ```

_Data: PropAce Institutional Advisory analysis of URA/HDB transaction data — rolling 3-month average PSF, private residential, 2026-06..2026-08. Directional; confirm before acting._

Sources

• URA caveat data, compiled by PropAce Institutional Advisory— 2026-Q2.
• URA caveat data, compiled by PropAce Institutional Advisory.

References

• Monetary Authority of Singapore (2026) SORA Interest Rate Benchmark.

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Frequently Asked Questions

What is SORA and why did it replace SIBOR?

SORA, the Singapore Overnight Rate Average, is a benchmark calculated by MAS from actual overnight interbank transactions, not from bank quotes. It replaced SIBOR and SOR because those older benchmarks were based on estimates and derived instruments, which made them vulnerable to manipulation. A transaction-based rate is harder to game and more honest as a reference for your home loan (Monetary Authority of Singapore, 2026). Statutory Source:** [Monetary Authority of Singapore (MAS) — SORA Bench

Will my SORA mortgage rate change every day?

No, and that is the point of compounded SORA. Most home loans use three-month compounded SORA, which averages a quarter of daily overnight rates into a single number. Your rate is set for the next three months at the start of each period, so your monthly repayment holds steady for the quarter even though the underlying benchmark is computed daily. Statutory Source:** [Monetary Authority of Singapore (MAS) — SORA Benchmark Framework & Compounded SORA](https://www.mas.gov.sg/bonds-and-bills/sora-o

What is the difference between SORA and the rate I see quoted by banks?

Banks quote your loan as a spread on top of the benchmark — for example, three-month compounded SORA plus a margin. The SORA component is the market-driven part; the spread is the bank's margin and your negotiable piece. You should compare spreads only after understanding where SORA itself is heading. Statutory Source:** Monetary Authority of Singapore (MAS) — SORA Benchmark Framework & Compounded SORA

Does SORA affect how much I can borrow under TDSR?

Indirectly. Your loan quantum is capped by the Total Debt Servicing Ratio, which limits monthly debt obligations to 55% of gross income regardless of today's SORA level (99.co, 2026). But a higher SORA raises your actual monthly repayment, which consumes more of your 55% headroom in real cash — so the benchmark shapes affordability even though it does not move the TDSR ceiling itself. Statutory Source:** [Monetary Authority of Singapore (MAS) — SORA Benchmark Framework & Compounded SORA](https:/

Should I fix my rate or stay on a SORA-linked package?

That depends on your cash-flow buffer. SORA-linked packages give you quarterly resets and no penalty if rates fall, but they expose you to upward moves. A fixed-rate package buys certainty at a price — usually a higher starting rate. If your TDSR headroom is thin, certainty is worth the premium; if you can absorb a two-point shock, you can live with SORA's ups and downs. Statutory Source:** [Inland Revenue Authority of Singapore (IRAS) — Late Payment or Non-Payment of Stamp Duty](https://www.ira

Statutory References & Citations

• Monetary Authority of Singapore (MAS) (2026). Notice 645: Computation of Total Debt Servicing Ratio (TDSR) for Property Loans. Singapore: MAS.
• Singapore Land Authority (SLA) (2026). Land Titles Act (Cap. 157) & Conveyancing Registration Framework. Singapore: SLA.

Statutory Disclaimer: This guide is published for strategic, educational, and institutional planning purposes only and does not constitute formal legal, taxation, or financial advice. All property transactions, stamp duty remissions, and financing structures should be formally verified with qualified Singapore legal counsel and certified tax advisors.